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Tamil Nadu Board of Secondary EducationHSC Commerce Class 12

‘Financial statements are prepared based on past data’. Explain how this is a limitation.

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Question

‘Financial statements are prepared based on past data’. Explain how this is a limitation.

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Solution

The nature of the financial statement is historical. Past cannot be the index of the future and cannot be cent percent basis for future estimation, forecasting, budgeting, and planning.

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Chapter 8: Financial Statement Analysis - Short answer questions [Page 286]

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Samacheer Kalvi Accountancy [English] Class 12 TN Board
Chapter 8 Financial Statement Analysis
Short answer questions | Q III 1. | Page 286

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